Adani Group Looking to Exit FMCG Joint Venture with Wilmar
11.28.2023 By Tank Terminals - NEWS

November 28, 2023 [Financial Express]- Twenty years after it sold its edible oil plant in Andhra Pradesh to Adani Wilmar, there is a growing buzz that the Kolkata-based ITC may be looking at a possible re-entry into the business. Informed sources say the cigarette-to-FMCG major’s interest in Adani’s nearly 44% stake in Adani Wilmar may have been triggered in part due to its growing presence in branded commodities.

 

A mail sent to the Adani group about its stake sale in the Wilmar JV elicited no response till the time of going to press. An ITC spokesperson said that the company does not comment on market speculation.

The Adani group has been reportedly looking to offload its 43.97% stake in its equal joint venture with the Singapore-based Wilmar group, in a bid to bring its focus back on its energy and infrastructure businesses. Media reports say talks are also on with other investors.

The maker of Sunfeast biscuits, Aashirvaad atta and Yippee noodles has been looking to expand its foods business, which contributes almost 83-84% to the company’s overall FMCG revenue of Rs 19,123 crore (for FY23). Areas such as branded commodities, where the shift from unbranded to branded has been rapid over the last few years, has prompted national and regional players to up their presence in the space, sector experts said.

Though ITC exited the edible oil business over two decades ago, selling its controlling stake in ITC Agro Tech — its erstwhile food business subsidiary — to ConAgra Foods of the US (now called Conagra Brands), it may not be closed to the idea of getting back into the business now, provided it gets a strong brand and processing plants, the sources said.

The Adani Wilmar JV is among the country’s top refiners with an FY23 topline and bottomline of Rs 58,185 crore and Rs 582 crore each, best-known for its Fortune brand of edible oil and food products. The company reaches over 113 million households, has 23 manufacturing plants and 5,700 distributors, its website says.

The Ahmedabad-based group is said to be talking to multiple players including Wilmar, some multinational consumer goods companies as well as financial investors such as GQG Partners and Qatar Investment Authority (QIA) for the sale of its stake valued at around $2.5-3 billion (Rs 20,000-24,000 crore) in the JV.

Some of the domestic players in India’s edible oil market include Agro Tech Foods, which makes the Sundrop brand of edible oils, Cargill India, which makes NatureFresh, Sweekar and Gemini edible oils, Bunge India, which makes Dalda Vanaspati and cooking oil among other brands, and Emami Agrotech (Healthy & Tasty), Marico (Saffola) and Patanjali Foods.

 

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